How to Start a Trademark Licensing

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An Overview of Trademark Licensing

Trademark Licensing is a process where a registered owner of a Trademark approves a third party to use the mark or logo without transferring the Trademark ownership. In simple terms, the Trademark Licensing allows the registered owner to let others use the mark or brand name without assigning the actual ownership of the mark. The Trademark owner can also put some other restrictions on the usage of registered Trademark via the terms that they put into the Trademark Licensing Agreement. The registered Trademark owner can derive royalty from the Licensee for the agreed commercial uses of the registered Trademark. Here, it should be noted that only some rights concerning a registered Trademark are given to the Licensee and the exclusive ownership over the licensed Trademark and other essential rights linked with the Trademark rest with the registered Trademark owner. Swarit Advisors offers very detailed and beneficial information regarding Trademark Licensing, and our team of professionals will help in this service to domestic as well as international companies & firms.

Section 49 of the Trademark Act, 1999, deals with the licensing of Service Marks and Trademarks in India. Licensing of Trademarks is generally based on some agreed terms & conditions concerning the quality standard of the proposed product, maintenance of the established status of the concerned product and Trademark, exclusiveness for the same, the different ways the Trademark may be used, etc. Trademark Licensing is undertaken for a specified time. The Indian Trademarks Act has not advised any legal terms or tenure for Trademarks Licensing in India.

What are the Types of Trademark License?

Following are the different types of Trademark License:

  1. Sole License: This license is an edition of an exclusive license where both the Licensee and the Licensor can use the Trademark. But, the Licensor is not allowed to license the Trademark to others.
  2. Exclusive License: This license grants the rights to commercial use of the Trademark exclusively to the Licensee.
  3. Non-Exclusive License: A Licensor can grant a Non-Exclusive License or multiple licensees.

Benefits of Trademark Licensing

  1. Financial Benefit: Both the parties can avail financial benefits as the Trademark is extensively exploited for profit & royalty is paid to the owner. The Licensor, who couldn't exploit their Trademark, say, due to deficiency of visibility or resources, can now make the use of Licensee's resources by permitting them the license & make more profits. The Licensee also gets their share in the profits.
  2. Expand Trademark’s Popularity: As the Trademark reaches a huge number of customers, it automatically becomes popular. This aids in more profits via increased sales and aids in further Trademark Licensing.
  3. Help in Expanding Business: The Trademark owner's business expands, and its outreach spreads to various territories. The business no longer detains itself to a specific area; rather, the Licensee can use their distributor skills for the expansion of business.
  4. Brand Recognition: Trademark as a brand becomes a well-known one in territories it was prior unknown. The Licensee can use their resources to promote extensively.
  5. Reduce or Distribute Workload: The Licensee, in a way, becomes the Licensor’s partner. The workload of the Licensor is reduced & he or she don't need to worry regarding the quality of products & services as the Licensee is equally accountable for maintaining the products' quality he or she creates using the Trademark.

What is Trademark Licensing Agreement?

If you are a Licensor, then it is vital to conduct a due diligence check on a capable Licensee to confirm that they have the essential managerial & financial capacity to use the Trademark in a useful way. But, irrespective of whether you are a Licensee or a Licensor, it is essential that the Trademark Licensing Agreement is drafted concisely to help in avoiding problems. Following are some vital clauses that should be contained in your Agreement:

  1. Parties’ details and their firm structure;
  2. Commencement date of the Licensee to use the Trademark & expiry date if applicable;
  3. Payment information for the Licensor in the form of an aggregate payment or royalties amount;
  4. Grant clause; defining whether the license terms are exclusive, sole, or non-exclusive.

Procedure for Trademark Licensing as Embodies under Trademark Act

Although recordal of permitted use is voluntary, it is advisable that the Registered User Agreement or License Agreement be registered with the Trademark Registrar. An application for recordal of Registered User Agreement or License Agreement with the Trademarks Registry can be made regarding registered Trademarks, and the application for recordal of the proposed License Agreement should be made or drafted within 6 months from the date of Agreement.

For registering an individual as a Registered User or Licensee of a Trademark, the registered owner or Licensor and the Registered User or Licensee shall equally apply in writing to the Trademark Registrar on Form TM-U along with:

  • A duly certified copy of Agreement or written Agreement entered into between the registered owner or Licensor and the proposed Registered Use or Licensee concerning the permitted use of the proposed Trademark;
  • An Affidavit made by the registered owner or Licensor giving details; of the connection between the Licensor or registered owner and the proposed registered user or Licensee – of control by the owner or Licensor over the permitted use by the Licensee which their relationship will present – products or services concerning of which Registration is proposed; of restrictions/conditions, if any, proposed concerning the characteristics of the products or services, to the place of the permitted use, or to any another matter of time period for the permitted use;
  • A signed Power of Attorney in favour of agents (if any);
  • Extra documents or proofs as may be required by the Trademark Registrar or as may be prescribed.

Once the Trademark Registrar is fulfilled with the application and the entails facts, they register the proposed Licensee or Registered User concerning the products or goods as to which he or she is fulfilled. The entry in the Trademark Register shall state the date on which the application of the registered user was filed. The recordal will be published in the Journal within 2 months from the Trademark Registration date. The Trademark Registrar is also required to issue a notice in the suggested manner of the Registration of such Licensee to other Licensees or registered users of the proposed Trademarks (if any). Therefore, upon the applicant's request, The Trademark Registrar shall take steps to ensure that the details given for the application under the Section (other than matters entered in the Trademark Register) are not revealed to opponents or competitors in trade.

Cancellation/Variation of Registration as a Registered User or Licensee

A Trademark or brand may be licensed for some or all the products or services covered. The Act under Section 50 furnishes Cancellation/Variation of Registration as a Registered User or Licensee has used the Trademark in a way not in accordance with the Agreement, or the owner or user has failed to reveal any material fact for such Registration or that the specification in the Agreement about the quality of products is not enforced, or that the conditions have altered since the Registration Date, etc. Under the proposed provision, notice and chance of hearing is given before cancellation of Registration.

Frequently Asked Questions

It is beneficial for businesses that can boost your brand and allow for expansion into markets.

In this Agreement, the Licensor of a registered Trademark gives permission or rights to another company or Licensee to distribute & manufacture products under their Trademark.

Trademark Assignment is an alteration in the registered Trademark ownership, whereas; Trademark Licensing is the transfer of certain rights or a registered Trademark while maintaining the proprietorship over the Trademark.

Types of Trademark Licensing:

  • Exclusive License.
  • Sole License.
  • Non-Exclusive License.

It is advisable to hire an agent because they can manage everything from contract negotiations and product development product merchandising & packaging.

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